Georgia farmers squeezed by shutdown

It’s harvest time in South Georgia, and Mike Lucas is starting to worry about paying his bills.

The partial shutdown of the federal government has closed the Farm Service Agency office in Bleckley County, where Lucas heads each year about this time to get a federally backed “marketing loan” for his peanuts.

The nine-month loan allows Lucas to space out peanut sales during the year, because prices are lowest at harvest, while immediately paying off his crop and equipment loans as well as land rent.

The shutdown has left most of the U.S. Department of Agriculture closed, squeezing farmers across the country who rely on the loans. As with most aspects of the shutdown, the longer it drags on, the more strain it applies.

“Everybody is looking for a little bit of money,” Lucas said. “They’ve worked all year and it’s about time for a paycheck.”

There were signs of movement towards a deal in Washington on Friday, as key members of Congress and President Barack Obama discussed proposals to reopen the government – which has been partially shut down since Oct. 1 – and lift the nation’s borrowing limit.

Closed national parks, furloughed federal workers and uncertainty for kids in Head Start programs have been among the most visible effects. But the shutdown ripples are being felt in farm country, too.

Farmers, commodities markets and even researchers trying to develop new and improved peanuts, peaches and cotton are feeling the effects, said Nathan Smith, a University of Georgia-Tifton associate professor and agricultural economist with the UGA Cooperative Extension Service.

“The longer you go, the more interest you have to pay” on the operating loans, he said. “I’m assuming whenever the government opens up, we will still see another two- or three-week delay,” he added. “It could potentially be a cash flow issue.”

Meanwhile, Smith said his own efforts to provide crop projections have been frustrated because the USDA data web sites have gone dark.

“Their website is shut down. You can’t get any new data. You can’t get any old data. … That’s a little frustrating,” he said. “The futures (markets) and exchanges watch those numbers closely.”

Likewise, agricultural researchers are blocked from gathering data of another sort – plants, seeds, fruits and fibers – that are now locked behind closed gates on the USDA’s experimental farm plots.

“They’re doing research crops, and it’s harvest time, and they can’t get in,” said Smith.

Last year Georgia farmers and landowners received $163.6 million in direct payments and other subsidies under various federal farm programs, according to the Environmental Working Group, a Washington, D.C.-based environmental group. Cotton crop subsidies accounted for about a third of that total, but Georgia farmers also got $36.8 million in disaster assistance and $19.8 million in conservation program payments targeting forest and wetlands, according to EWG.

Those subsidies mostly continue during the shutdown, while the loans have ground to a halt.

Many farmers take out Commodity Credit Corporation loans at harvest time using their crops as collateral to get some instant cash flow. Farmers pay those loans back with interest when selling off the crops.

The Farm Services Agency is not making new loans, and farmers who have loans in hand cannot pay back a closed agency, meaning they can’t sell the crops they are holding as collateral.

“Basically everything is frozen,” said Andy Bell, who farms 2,000 acres of cotton, peanuts and corn with his brother in Climax, Ga., in the southwest corner of the state.

Bell said he worries, too, about what happens after the shutdown ends.

“It’s just delaying everything,” he said. “You don’t just get a loan overnight. If you take the paperwork into the FSA office and want to put peanuts under a loan, it takes a week or whatever. Now everybody’s will be piled in on top of each other, so it’s going to take some time.”

The shutdown has varied effects across Georgia’s agriculture industry, the state’s largest.

Little has changed for poultry farmers. Meat inspectors – federally required for production lines to run – are on the job.

The meat industry was concerned that the shutdown could affect delivery of much-needed animal vaccines, but this week the USDA brought back furloughed employees at the Center for Veterinary Biologics to keep the vaccines flowing as an essential government function.

Bell said he is more concerned about the across-the-board cuts known as sequestration, which are set to hit the loan programs when the government reopens and the new fiscal year begins. The 5.1 percent cut will reduce peanut loan prices by $18 per ton, he said.

“I really don’t understand why the cuts are affecting the loan program because they have to be paid back with interest,” he said.

In all, the news coming out of Washington, which Bell follows closely on his smartphone, has been dispiriting.

“I would say they need to make a decision and let’s move forward,” he said. “All businesses do that and it doesn’t seem like Washington can make its mind up right now. They can, just both sides have dug in.”